Sir Robin Knox-Johnston CBE takes up the cudgel on behalf of cruising sailors

In a letter published in The Times newspaper today, Sir Robin Knox-Johnston, Patron of the Cruising Association (CA), highlights the devastating effect of HMRC’s demands for VAT on boats returning to the UK.

Sir Robin aboard Suhaili in Cowes recently

His letter is counter-signed by many other sailing ‘names’ including Sir Ben Ainslie, Mike Golding OBE, Pip Hare, Dee Caffari MBE, Libby Purves OBE, Paul Heiney and Bob Shepton, in addition to the President of the CA, Julian Dussek.
Sir Robin writes:
“The freedom for yachtsmen and women to sail from the United Kingdom and return a few years later has been struck a deadly blow by Her Majesty’s Revenue and Customs (HMRC).
“As recently as April 2019 HMRC had said that the status quo (i.e. no further VAT would be due on returning British registered pleasure craft which had already paid VAT) would persist after we left the European Union. However in late 2020 HMRC changed their ruling and stated that all British boats that had been out of the UK for three years or more will have to pay VAT again if they return to the UK.
“An eighteen month period of grace within which pleasure craft can return without incurring VAT dues has been granted, but that might be insufficient for yachts that are as far away as Australia. No privately owned boats can now leave the UK for more than three years without having to pay VAT a second time on their return.
“Boats (private pleasure craft) are subject to VAT regulations on “Goods” by HMRC. We are asking the Government to add British Registered pleasure craft, on which VAT has already been paid, to the list of exceptions to VAT demands on returned goods in order that British sailors can continue to enjoy the centuries-old practice of extended cruising abroad.”
The CA’s President, Julian Dussek, was also interviewed by The Times about the issues faced by so many of the association’s members. Mr Dussek told the reporter:
“HMRC changed their tune from previously stating that when we left the European Union it would be status quo regarding VAT and they suddenly changed the rules at the end of last year.
“The three major changes are:
1. Any boats that had been in the UK and were now abroad would have to be back within three years from 2017 to avoid paying the VAT a second time, initially by the end of the year, rapidly changed to the end of 2021 and, because of Covid, changed to June 2022. Backdating the departure date to 2017 was a totally unreasonable demand.
“2. HMRC would not recognise boats in the EU which were fully VAT paid while we were in the EU with the consequence that they cannot now return to the UK without having to pay VAT again.
“3. It is now impossible to sail away from the UK for more than three years and return without having to pay VAT for a second time.”
Julian Dussek discussed how many boats this might affect stating that up to 30,000 UK-owned boats in the EU would be affected by these rulings. “We don’t know precisely how many people actually leave the UK each year for extended cruises.”
When asked about the cost of buying a new yacht, Mr Dussek said that a reasonable standard cruising yacht could cost upwards of a £150,000 and that the VAT on returning to the UK later would be considerable because boats don’t necessarily depreciate.
From Peta Stuart-Hunt for the Cruising Association.
Meanwhile the European Boating Industry group provided more detail on the matter last week:
Collaboration between leading leisure marine associations continues with clarification on post-Brexit certification requirement6 May 2021 – Following the successful cooperation on VAT and customs, the leading European, British, and international leisure marine associations continue to provide clarity on the new post-Brexit trade relationships.

The International Council of Marine Industry Associations (ICOMIA), European Boating Industry (EBI), European Boating Association (EBA), British Marine (BM) and the Royal Yachting Association (RYA) now issue a clarification on certification requirements for second-hand boats in trade between the EU and UK post-Brexit.

In dialogue with the EU and UK authorities, the key questions were raised, and clarification received. EBI has been liaising with the European Commission and BM has taken the lead with the Department for Business, Energy and Industrial Strategy (BEIS). The scenarios have been confirmed by BEIS and are understood to be correct based on guidance by the European Commission.

Below are the scenarios for second-hand boats that are covered by the EU’s Recreational Craft Directive and the UK’s Recreational Craft Regulations. In cases where recertification would be required, a Post-Construction Assessment (PCA) will have to be completed. This applies from the end of the transition period (TP) on 1 January 2021.

 

Scenario Situation in 2021 Situation in 2022
Scenario 1

·       Boat in GB at end of TP

·       CE-marked

·       Sold in GB

·       Remains in GB

 Would not need to be recertified Would not need to be recertified
Scenario 2

·       Boat in GB at end of TP

·       CE-marked

·       Imported to EU27

 Would need to be recertified Would need to be recertified
Scenario 3

·       Boat in EU27 at end of TP

·       CE-marked

·       Sold in EU27

·       Remains in EU27

 Would not need to be recertified Would not need to be recertified

 

Scenario 4

·       Boat in EU27 at end of TP

·       CE-marked

·       Imported to GB

 Would not need to be recertified Would need to be recertified
Scenario 5

In GB sold to EU end user, but:

·       First sale in EU-27 (not GB market), (CE-marked, bought by EU citizen, registered, and used in EU)

·       Second sale to GB before 1 January 2021

·       Subsequent sale back to EU

 Would not need to be recertified (but proof required by national authorities) Would not need to be recertified (but proof required by national authorities)

 

Further clarifications are being sought from BEIS and the European Commission related to trade with Northern Ireland.

Commenting, Philip Easthill, Secretary General of EBI, says: “We are delighted to continue the positive cooperation on another important issue for industry and boaters. We hope that despite the additional barriers for second-hand boats, the clarification on VAT and now certification will facilitate trade as much as possible. Together with our partners, we will continue to work on mitigating the impact of Brexit through our advocacy channels at EU level.”

Lesley Robinson, CEO of British Marine, adds: “I am pleased that this collaborative approach between marine industry associations and governments has proved effective in receiving timely responses for our members. Whilst the agreed guidance approved by both BEIS and the EU Commission offers boat builders, brokers and consumers the clarity and reassurance required to proceed with trade, they still face impacts in terms of both time and cost when selling and buying second-hand boats cross borders. On behalf of our members, British Marine will now look to work with UK government   at the reduction or removal of these new burdens.”

Patrick Hemp, Technical Consultant of ICOMIA, added: “We are aware that the obligation to recertify CE-marked second-hand boats, which were in Great Britain at the end of the transition period and then subsequently imported into the European Union, will come as a surprise to many within our sector but we hope that the continued collaboration between the marine industry associations provides further clarity on the different requirements within the new trade relationship.”

Any questions can be directed to the relevant leisure marine representative body via the details below:

 British Marine:             brexit@britishmarine.co.uk
EBA:                               admin@eba.eu.com
EBI:                                 office@europeanboatingindustry.eu
ICOMIA:                         info@icomia.com
RYA:                                cruising@rya.org.uk